What Went Wrong is our series on real, published cases. Each entry follows what the documents said, what the court did, and what it teaches. Every quotation comes from the court’s own opinion. These are other parties’ cases, not our clients, and they predict nothing about any reader’s situation.
People who come to us with an old, unreported foreign account tend to hold two comforting beliefs. The first is that an honest misunderstanding of the rules will protect them from the willful penalty. The second is that once the IRS signs a deal and cashes the check, the matter is closed. In June 2026 the Eleventh Circuit, the federal appeals court whose rulings govern Florida’s federal courts, published an opinion that takes both beliefs apart in a single case. The story begins with a Swiss bank account held in the name of a dog.
The setup
The account was born from advice. “In the 1990s, Niksich’s accountant advised Niksich to place his assets in a Swiss account to protect from a potential judgment creditor.” With a foreign asset manager’s help, Eugene Niksich opened an account at a private bank in Zurich. It did not carry his name. The alias on the account was “Misty,” the name of his dog. He paid the bank a fee to hold his mail, though he later testified he had “no idea” about the fee, and he intentionally hid the account from his then-wife. The balances ran into the millions of dollars. In 2010 the money moved to a second bank, and around 2011 he opened accounts in Panama ahead of a permanent residency he was planning there.
The tax returns matched the secrecy. Niksich self-prepared his personal returns, and his accountant reviewed them. He reported income from his many domestic investments year after year and never disclosed the foreign ones. Federal law required him to report those accounts annually on an FBAR, a filing separate from the tax return, and Schedule B of the return asked him the foreign-account question directly. In 2006 he marked “No.” For the tax years 2007 to 2012 he left the question blank. He holds an MBA, and he knew about FATCA, the federal law that pushes foreign banks to report their American customers, and discussed it with family members, Panamanian bank representatives, and a business associate.
The fight
Disclosure came late. In 2014 Niksich entered the Offshore Voluntary Disclosure Program, the IRS amnesty track of that era, and later opted out, with the opt-out approved in March 2017. In 2019 the examining agent on his case, Daniel Ford, presented a Form 906 closing agreement, the IRS’s formal settlement document, with a penalty of $419,123. Niksich signed it and paid.
Then the deal evaporated. In June 2020 the IRS said it would not enter the settlement, asserting that Niksich had been removed from the disclosure program rather than opting out, and mailed him a penalty assessment of $2,286,954 for willfully failing to file complete and accurate FBARs for 2006 to 2012. He had signed the government’s own form and paid the number printed on it, and the government assessed the full amount anyway.
The government sued to collect, the district court granted it summary judgment, and the fight moved to the Eleventh Circuit. On the settlement, the panel conceded how the deal looked. Ford testified that the check had been processed, and the court acknowledged that “This all suggests that an accord and satisfaction took place.” Then came the turn. “But the IRS agents did not have actual authority to bind the IRS.” The proof sat on the face of the document. Ford had signed only as a receiving officer recommending acceptance, and, as the district court put it, “[t]he signature line certifying that the ‘Commissioner of Internal Revenue’ has read and agreed to the terms of the document [was] conspicuously blank.” The panel’s conclusion was blunt. “From the face of the document, it is clear that the agreement was not binding and that Ford did not have actual authority.” Behind both courts stands a Supreme Court rule from 1947, Federal Crop Insurance Corp. v. Merrill. “[A]nyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority.”
His attempts to get the money back fared no better. The panel allowed that “The IRS may have behaved poorly,” and still held that his informal requests could not substitute for the formal path. Recovering an FBAR payment takes a formal refund claim or a refund suit against the government, and because Niksich pursued neither, he was not yet entitled to a refund.
On willfulness the court applied a standard that leaves no room for good intentions. Its FBAR cases ask whether a filer “clearly ought to have known” of “a grave risk that an accurate FBAR was not being filed” while “in a position to find out for certain very easily,” and they measure the answer by “an objective standard: action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known,” language the panel drew from its earlier decision in United States v. Rum. Then it recited the record. “The undisputed facts support a finding of willfulness.” He opened the account to keep assets away from a potential creditor and hid it from his then-wife. “He kept at least one foreign account in his dog’s name, and he paid a fee for the foreign bank to hold his mail.” He knew of and discussed FATCA, and “his professional experience and master’s degree in business administration suggest he should have known about filing FBARs.” His central answer, that he had not willfully broken the law but merely misunderstood it, was “insufficient to preclude summary judgment under an objective standard.”
The court reversed on one question only. After the district court ruled, the Eleventh Circuit held in another taxpayer’s case, United States v. Schwarzbaum, that the Excessive Fines Clause of the Eighth Amendment applies to FBAR penalties. So the panel sent this case back “so the parties may have an opportunity to develop a factual record” on whether a $2,286,954 penalty is constitutionally excessive. That number is an assessment, not a finished judgment. Whether it survives the Constitution remains open on remand as we write this.
What it teaches
Concealment facts write the willfulness opinion for the government. An alias, a paid mail hold, an account hidden from a spouse, a “No” followed by six years of blanks. Facts like these decide the case before the first brief is filed, because the court never has to ask what the filer honestly believed. The standard is objective, so a sincere “I misunderstood the rules” changes nothing on summary judgment. If you are trying to understand which side of the line a set of facts sits on, start with our guide to willful vs non-willful FBAR penalties, and notice how much of the government’s proof in this case was conduct, not state of mind.
A settlement with the IRS is only a settlement when the signer could bind the IRS. Niksich did everything most people would call settling. He negotiated, he signed the government’s own closing-agreement form, he paid, and the check was processed. None of it bound the government, because the examining agent lacked actual authority, and the signature block said so to anyone who knew where to look. Under a Supreme Court rule that has stood since 1947, the risk of that gap sits entirely on the person dealing with the government. The second half of the lesson costs people real money. Once funds are with the IRS, getting them back requires a formal refund claim or a refund suit, and informal requests preserve nothing at all. This is why representation matters through the last signature, not merely through the negotiation. The modern IRS voluntary disclosure path exists precisely so that the process ends in a closing agreement executed by someone with authority to sign it.
The cheapest exit closed years before anyone reached a courtroom. The account opened in the 1990s on advice aimed at a creditor. The correction did not begin until 2014, and by then the record you have been reading, the alias, the mail hold, the blank Schedule B answers, had been building for years. Coming forward voluntarily, before the government holds the data, is usually the least expensive way out of an unreported account, and every year of waiting tends to raise the price. If a foreign account in your life has never been reported, the sequence of your next steps matters more than any single form. We screen exactly these situations, walk through the disclosure options with their real costs, and stay in the room through the last signature. Start with a free 30-minute consult, and bring the questions you have been afraid to ask out loud.
The case. United States v. Niksich, No. 24-12882 (11th Cir. June 4, 2026). Quotations are from the court’s published opinion. No reporter citation has issued yet, and one question, whether the penalty is constitutionally excessive, remains pending on remand. The parties were not clients of this firm, and every case turns on its own facts.
Related Guides
- FBAR penalties, explained
- Willful vs non-willful FBAR penalties
- The IRS voluntary disclosure path
- How long the IRS has to assess FBAR penalties
Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about Florida law, not legal advice, and does not create an attorney-client relationship.